Nickel hit five year lows in the US$15,000 per MT range in early April, driven by a combination of global overproduction, tight ore availability and geopolitical tensions, including the escalation of US tariffs on Chinese goods.
Indonesia, the world’s largest nickel producer, is at the heart of these market dynamics. The INSG said ‘delays in the issuance of mining permits’ are creating ore tightness, even as refined production continued at elevated levels.
In 2024, Indonesia mined an estimated 2.2 million MT of nickel, accounting for over half of global output.
However, regulatory uncertainty has compounded challenges for Indonesian producers.
The country’s newly approved royalty hikes, which increase the rate from 10 percent to between 14 and 19 percent depending on nickel prices, have sparked backlash from industry stakeholders. In a letter shared with the government, they called the increases “unrealistic and (not reflective of) the current state of the industry.”
Filipino policymakers have proposed following Indonesia’s earlier example by banning exports of raw nickel, a move that, if implemented, could introduce fresh instability to global supply chains reliant on Southeast Asian ore.
China’s expanding nickel output
In China, the INSG forecasts further growth in primary nickel output in 2025, fueled by expansions in nickel cathode and nickel sulfate production. This growth is expected even as nickel pig iron output declines.
Yet demand in China — the world’s largest nickel consumer — faces headwinds. Tariffs from the US and sluggish activity in key sectors like construction and home appliances have pressured stainless steel demand.
According to the INSG, stainless steel production in China grew 10.6 percent year-on-year in the first quarter of 2025, with analysts expecting another year of surplus.
At the same tiime, the nickel-intensive EV battery market has been slower to expand than anticipated. Increased reliance on lithium iron phosphate (LFP) batteries, which do not require nickel, and rising demand for plug-in hybrids over fully electric vehicles, have both dampened growth prospects for nickel demand.
US tariffs deepen market volatility
The Trump administration’s escalating tariffs against China have also weighed heavily on the market — nickel prices dropped 11.5 percent in the week after new tariffs were announced on April 2.
The impact of tariffs on midstram and downstream battery products has been especially severe.
Thomas Matthews, an analyst at CRU Group, explained during a recent webinar that US tariffs on Chinese goods will soon amount to 173 percent for energy storage batteries and 143 percent for EVs.
“We’ve already seen that there was significant amounts of stockpiling prior to the tariffs being implemented,” he said, adding, “But there are also now huge volumes of batteries that are sitting in US bonded warehouses, which is proving to be a major headache for the importers.’ Matthews also noted that although imports of cobalt and lithium remain exempt from new tariffs, “nickel, interestingly, is currently not exempt.”
The INSG’s next meetings are scheduled for October 6, 2025. In the meantime, with surplus forecasts rising and demand signals weakening, nickel faces another challenging year ahead.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
